Grain markets remain volatile, but the level of price movement has been lower than in previous weeks.
MATIF December wheat futures closed at €332.50/t last Tuesday week and at €327/t on Tuesday of this week. In the meantime, it had been back to €315/t and up to €340/t, but it mainly floated between €320/t and €330/t.
A number of factors, including harvest pressure, are depressing prices, but the fundamentals are stronger as we get away from harvest. Maize yields will be critical.
Movement out of Ukraine
Part of the ongoing global price pressure is driven by optimism that some sort of deal can be done to free up Ukrainian grain shipments.
While there is no formal deal yet, some commentators expect Russia to announce an end to the blockade this week.
It also transpires that the Ukrainian wheat harvest will now be much lower than had been anticipated. Its Ministry of Agriculture has stated that new-crop wheat yields are averaging around 2.88t/ha so far, down from 4.53t/ha last year.
The output drop is being put down to lack of inputs and the hot dry weather during the growing season.
Dryness and heat have also been important factors elsewhere. In France, the continuing heatwave has accelerated wheat harvesting which has pressured prices.
More than half the soft wheat in that country is already harvested. This, along with developments in Ukraine, has helped to pressure prices.
Together, these factors caused MATIF December wheat futures to close last week at €316.75/t, the lowest weekly close value in months and down by €28.25/t on the week.
Dryness also continues in Argentina and this is a concern for its wheat production numbers. Last week, the Rosario Grain Exchange reduced its output projection to 17.7Mt from 18.5Mt a month earlier. This is down from the 19.5Mt projected in the WASDE report from the USDA last week.
Maize production remains critical to EU wheat and barley price development. Hot, dry weather in the US and the EU could be negative on yield potential in both regions. The crop is currently pollinating and very vulnerable.
There are no major changes to native physical prices - daily bounces, but in a tighter band.
The nearby market is now all-but finished and it looks like November dry prices remain around €340 to €350/t for wheat and €325 to €335/t for barley. These suggest green barley prices above €280/t and some merchants have already committed to €300/t.